Most Treasurys hold near flat

10-year yield hits 1-month low ahead of Greenspan

By

RachelKoning

NEW YORK (CBS.MW) - Treasury securities were little changed Monday, with the yield on a benchmark 10-year issue slipping to a one-month low on expectations congressional testimony from Alan Greenspan will confirm lower Federal Reserve interest rates are on the way.

The Fed chief is slated to testify on monetary policy before the Senate Banking Committee on Tuesday morning, beginning at 10 a.m. Eastern.

"The bond market will be particularly vulnerable to any signs of a pickup in economic activity in January since it has already priced in at least 50 basis points of additional easing by the Federal Reserve," said Lynn Reaser, chief economist and senior market strategist with Bank of America. "Mr. Greenspan's comments, retail sales and industrial production will thus appear particularly bright on the indicator panel."

The central bank has its next scheduled policy meeting on March 20 and investors are looking to Greenspan for hints on Fed action.

The Fed's key bank lending target now stands at 5.50 percent after rates were cut a full point in two moves during January.

Federal funds futures, an indication of market expectations for Fed action in forward months, show an implied yield of just over 5 percent on an April contract, or nearly 50 basis points below the central bank's current lending target.

But traders said that the Treasury market remains somewhat vulnerable to hints from Greenspan that the economy is poised to bounce sooner than anticipated.

One voter on monetary policy, Boston Fed President Cathy Minehan said in a speech at an International Treasury Management conference Monday that the economy is ``better positioned to weather'' the slowdown than ``in previous periods of weakness.''

In addition to the retail sales and industrial production figures, data on business inventories, weekly jobless claims, housing starts and producer prices round out the week's economic calendar. See forecasts. Read Economic Preview.

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